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The Care and Feeding of Fat Cats

Last issue ["Labor's Loss," August 14, 2000], we described how, in the race for campaign dollars, business is outpacing labor by an increasingly wide margin: eight to one in 1994, 11 to one in 1996 and 1998, and 15 to one in the 2000 election cycle, according to the Center for Responsive Politics. The contribution gap between business and labor is nearly half a billion dollars wide: $521 million to $35 million.

This suggests that no matter which party is in control of Congress after November 7, members will be beholden more to business donors than to labor interests. This imbalance helps explain why Congress has rushed to eliminate the inheritance tax on all large estates, which would cost the Treasury $50 billion and benefit a tiny number of very wealthy families. And it also explains why the House just voted, once again, to delay the implementation of new "ergonomic" safety rules promulgated by the Occupational Safety and Health Administration to prevent repetitive-stress injuries on the job.

What many people don't realize is that the contribution gap could get worse if proposals being advanced by self-styled "centrist" reformers and "moderate" congressmen become law. Their idea is seductive: Let's raise the individual contribution limit, which is currently $1,000 per year, to $3,000. After all, proponents like Norman Ornstein of the American Enterprise Institute argue, the limit hasn't been changed since 1974, and $1,000 then is the equivalent of about $300 today.

Furthermore, they say, such a move makes sense if soft money--the unlim-ited, unregulated contributions made to parties--is banned. The leading bill to raise limits is currently being considered by the Senate Rules Committee, chaired by big money's best friend, Senator Mitch McConnell of Kentucky (who has hinted that he may send the bill to the Senate floor without committee review). It is cosponsored by Republican Senator Chuck Hagel and Democratic Senator Bob Kerrey.

But consider what this would mean in the business-labor context. Business interests get more of their clout from large individual contributions of $1,000 than labor does. Of the $666.6 million contributed by corporate America in the 1998 elections, half came in the form of large contributions of $200 or more from executives and their families. In contrast, less than half of 1 percent of labor's $60.8 million came in the form of large contributions. Business outpaces labor here by more than 1,000 to one. Labor's clout comes largely from its PACs, some of which are quite successful. For example, the number-one overall donor in the 1998 cycle was the American Federation of State, County and Municipal Employees (AFSCME), which contributed nearly $4 million to candidates and parties. AFSCME--like most unions--raises this impressive sum the hard way, through small contributions under $200. Indeed, according to reports filed by the union with the Federal Election Commission, 77 percent of the funds collected by the PAC in the 1998 election cycle came in small contributions.

By law, however, PACs are limited to contributing $10,000 per candidate per election ($5,000 for the primary, $5,000 for the election). So no one candidate got more than $10,000 from AFSCME's PAC. In contrast, though an individual may give no more than $2,000 per candidate per election cycle, corporations have been immensely successful in "bundling" contributions from numerous executives to a particular candidate.

In the 1998 elections, at least 116,930 business executives and family members made contributions of $1,000 or more to candidates and parties, compared to 118 labor contributors giving $1,000 or more. If all of these donors tripled their contributions, the gap between business and labor would be over $1 billion.

Though business outspends labor in soft money, the ratio is not nearly as extreme. In the 1998 election cycle, business outspent labor by 16 to one in soft money contributions: $167.2 million versus $10.3 million. Though labor would benefit from a soft money ban because of the simple fact that it is impossible to compete with business, a combination of a soft money ban with an increase in individual contribution limits would affect labor more adversely than it would business.

The lesson is simple: When it comes to reform proposals pitched as "compromises," let the buyer beware.

About the Author

Ellen Miller is the publisher of TomPaine.com. She is a former senior fellow at The American Prospect and the Moving Ideas Network.

A public interest advocate with over 30 years experience in Washington, D.C., Ms.
Miller's career spans early work with Ralph Nader at the Center for Responsive
Law and the Center for Auto Safety, to positions on Capitol Hill at the House
Intelligence Committee and the Senate Governmental Affairs Committee, and the
founding and direction of two nationally prominent organizations in the field of
money and politics  The Center for Responsive Politics and Public Campaign.
Before joining The Prospect, she served as president of Youth Venture, a
nonprofit focused on creating a dramatic change in the role of young people in
contemporary American society.

A nationally-recognized expert on America's campaign finance system, Ms. Miller
is well-known as a public speaker, commentator, and writer on a range of issues.
She serves on the boards of several non-profit organizations, including Earth
Action, the Center for Responsive Politics, and the Family Foundation, and lives
in Washington, D.C. with her husband, Richard, and their two daughters, Anne and
Elizabeth.